Economy of Papua New Guinea

| inflation = 4.4% (2020 est.)

| poverty =

| gini = 41.9 (2009, World Bank)

| hdi =

| labor =

| occupations =

| current account = $4.859 billion (2017 est.)

Abroad: $473 Million (31 December 2017 est.) BB- (Domestic) B+ (Foreign) BB (T&C Assessment) Outlook: Stable Moody's: It is dominated by the agricultural, forestry, and fishing sector and the minerals and energy extraction sector. The agricultural, forestry, and fishing sector accounts for most of the labour force of PNG while the minerals and energy extraction sector, including gold, copper, oil and natural gas is responsible for most of the export earnings. The country has made significant progress investing proceeds from oil and gas in infrastructure building. As a result, its major cities like Port Moresby and Lae have received increased international investor attention, giving rise to an unprecedented building boom to exploit the opportunities presented by the country's rise as a regional economic leader in the South Pacific region. This is well supported by its strategic location as a gateway from the Pacific to Asia, as well as its comparatively huge landmass and demographic profile (almost 7 times that of the rest of the smaller Pacific Island nations).

According to the International Monetary Fund, PNG, despite its poverty, is richly endowed with natural resources, but exploitation has been hampered by the rugged terrain and the high cost of developing infrastructure. Agriculture provides a subsistence livelihood for the bulk of the population. Mineral deposits, including oil, copper, and gold, account for 72% of export earnings.

Budgetary support from Australia and development aid under World Bank auspices continue to sustain the economy. Australia is PNG's largest aid donor, and will provide $479.2 million of aid in 2023. In June 2021 the World Bank approved a US$100 million (PGK 352 million equivalent) operation to support Papua New Guinea in its response to COVID-19, and to lay important foundations for a sustainable recovery.

Economy

thumb|Port Moresby's central business district

thumb|Main market in [[Goroka]]

Papua New Guinea is classified as a developing economy by the International Monetary Fund. The economy is largely dependent on natural resources, where capital investment is dominated by mining and oil, while most labour is taken up by agriculture. As of 2018, natural resource extraction made up 28% of overall GDP, with substantial contributors including minerals, oil, and natural gas.

Timber and marine resources are also exported, The EEZ forms the largest fisheries zone in the South Pacific. The dominant deep-sea fishery is tuna. There are also inland and coastal fisheries. This economic growth has been primarily attributed to strong commodity prices, particularly mineral but also agricultural, with the high demand for mineral products largely sustained even during the crisis by the buoyant Asian markets, a booming mining sector and by a buoyant outlook and the construction phase for natural gas exploration, production, and exportation in liquefied form (liquefied natural gas or "LNG") by LNG tankers, all of which will require multibillion-dollar investments (exploration, production wells, pipelines, storage, liquefaction plants, port terminals, LNG tanker ships).

Formal employment is low. There is a minimum wage, but it has declined in real terms since independence. The closure of the Bougainville mine led to issues with government finances, however an expansion of exports of oil, minerals, and forestry products led to economic recovery in the early 1990s. This growth did not decrease inequality however, and government services declined. This economic decline both caused and was exacerbated by increases in violence. Local violence damaged infrastructure, and defence expenditure increased. In 1986 the public services lost a significant degree of independence, leading to their becoming more politicised. Increasing government expense and resulting rising debt led to significant economic trouble. The Papua New Guinean kina was devalued and put on a floating exchange rate in 1994, and the country obtained an emergency loan from the World Bank in 1995.

GDP grew around 9.4% a year from 2008 to 2015, although this ranged from 0.7% from 2014 to 2015 to 21.1% from 2009 to 2010. According to the Asian Development Bank its GDP was expected to grow 3.4% in 2022 and 4.6% in 2023.

Mineral resources

thumb|The [[Ok Tedi Mine in southwestern Papua New Guinea]]

Significant exported minerals include gold, copper, cobalt, and nickel. Oil and liquified natural gas (LNG) are also significant resource exports. and Hidden Valley. As of 2014, talks of resuming mining operations in the Panguna mine have also resurfaced, with the Autonomous Bougainville Government and National Government of Papua New Guinea expressing interest in restarting mining operations in the area.

New nickel, copper and gold projects have been identified and are awaiting a rise in commodity prices to begin development. At early 2011, there are confirmation that Mount Suckling project has found at least two new large highly prospective porphyry bodies at Araboro Creek and Ioleu Creek. A consortium led by Chevron is producing and exporting oil from the Southern Highlands Province of Papua New Guinea. In 2001, it expects to begin the commercialization of the country's estimated 640 km3 (23 trillion cubic feet) of natural gas reserves through the construction of a gas pipeline from Papua New Guinea to Queensland, Australia. The project was shelved.

In 2019, the country was the 8th largest world producer of cobalt, and the 15th largest world producer of gold. In the production of silver, in 2017 the country produced 90 tons.

Mineral deposits account for 72% of export earnings.

Traces of gold were first found in 1852, in pottery from Redscar Bay on the Papuan Peninsula.

Oil and gas

The Iagifu/Hedinia Field was discovered in 1986 in the Papuan fold and thrust belt. Most crude oil produced is exported, although some is imported for energy production. It is the largest private-sector investment in the history of PNG. A second major project is based on initial rights held by the French oil and gas major TotalEnergies and the U.S. company InterOil Corp. (IOC), which have partly combined their assets after TotalEnergies agreed in December 2013 to purchase 61.3% of IOC's Antelope and Elk gas field rights, with the plan to develop them starting in 2016, including the construction of a liquefaction plant to allow export of LNG. TotalEnergies has separately another joint operating agreement with Oil Search.

Further gas and mineral projects are proposed (including the large Wafi-Golpu copper-gold mine), with extensive exploration ongoing across the country.

Agriculture, timber, and fish

The agricultural, forestry, and fishing sector accounts for most of the labour force of PNG. Agriculture currently accounts for 25% of GDP and supports more than 80% of the population. Most agriculture is subsistence, while cash crops are exported. The main crops by value are coffee, oil, cocoa, copra, tea, rubber, and sugar.

Agriculture

Agriculture in the country includes crops grown for domestic sale and international export, as well as for subsistence agriculture. Nearly 40% of the population are subsistence farmers, living relatively independently of the cash economy. Their traditional social groupings are explicitly acknowledged by the Papua New Guinea Constitution, which expresses the wish for "traditional villages and communities to remain as viable units of Papua New Guinean society" and protects their continuing importance to local and national community life. This makes farming the most widespread economic activity. Most is carried out through simple rainfed surface irrigation, with specific techniques varying by location. Taro is a historical crop, although the introduction of the now-staple sweet potato allowed for cultivation as high as . Metroxylon (a sago palm) is another common crop.

It is estimated that only 30% of the country's land has climate conditions and terrain amenable to agriculture. Most produce comes from smallholders, who farm less than . Plantation production has decreased since the 1980s, and by the mid-2010s smallholders produced 70% of tree crops. Intensive farming is carried out in highly populated areas, with a variety of land management techniques used to maintain soil productivity. Other crops produced and consumed domestically include sweet potato, banana, sago, taro, cassava, and sugarcane.

Timber

The timber industry was not active in 1998, due to low world prices, but rebounded in 1999. About 40% of the country is covered with timber rich trees, and a domestic woodworking industry has been slow to develop.

As of 2018, over three-quarters of the forest was considered old-growth, 11.9% was heavily logged, and 0.2% had been logged at small-scales. PNG has 42.68 mobile phone users per 100 population, estimated in 2017.

PNG has a low level of broadband uptake, estimated in 2017 at 0.213 per 100 population.

Energy

Particularly in rural areas there is reliance on traditional sources of biomass energy for cooking.

Electricity

Access to electricity

By 2017, only 50.42% of the rural population had access to electricity.

80.23% of the urban population in 2017 had access to electricity. Limitations in the transmission and distribution infrastructure lead to frequent outages in urban centers.

Around half of electricity is produced using petroleum products, while most of the rest comes from natural gas, and some comes from renewables (mainly hydropower). As of 2018, around half of the 797MW produced was from private sources, and this was mostly for use in mining.

As of 2018 the country had 8 power stations and 28 substations. Significant sources of energy generation include hydropower and diesel generators, while smaller sources include biogas, natural gas, and geothermal.

Entities and institutions

The Electricity Commission (ELCOM) was privatised with the passage of the Electricity Commission (Privatization) Act 2002. PNG Power Limited (PPL) is a vertically integrated utility responsible for generation, transmission, distribution and retailing of electricity throughout Papua New Guinea.

Electricity generation by source

Renewable energy

A study by Bloomberg New Energy Finance ranked PNG in the top 10 for potential renewable resources, with about 2.5 GW of these but only 2% of it exploited.

Hydroelectric projects

The Yonki Dam project, which commenced operation in 1991, on the Ramu River has generation capacity of 77 MW (103,000 hp) (Ramu 1) plus proposed additional capacity of 18 MW.

As of 2018, there was 432MW of hydropower capacity.

Edevu Dam is to be constructed by PNG Hydro Development Ltd (PNGHDL) to generate 50 Megawatts (MW).

Consultants to PNG Power have conducted feasibility studies for the Naoro Brown hydroelectricity Project which would supply up to 80MW of electricity to the Port Moresby grid.

Transport

The country's mountainous terrain impedes transport. Aeroplanes opened up the country during its colonial period and continue to be used for most travel and most high-density/value freight. The capital, Port Moresby, has no road links to any of PNG's other major towns. Similarly, many remote villages are reachable only by light aircraft or on foot.

Jacksons International Airport is the major international airport in Papua New Guinea, located from Port Moresby. In addition to two international airfields, Papua New Guinea has over 500 airstrips, most of which are unpaved. 21, including the international airport, are considered national airports. As of 2018, Air Niugini flew between 11 of the domestic airports. The second largest airline is PNG Air, and the third is Mission Aviation Fellowship. In total there are 22 official ports, 16 of which are run by the PNG Port Corporation. Private companies may maintain their own ports, usually to assist extractive industries. International trade routes from East Asia to East Australia pass through Papua New Guinean ports. As of 2010, international trade ships stopped in Papua New Guinean ports 6,330 times. to create an enabling environment for building an inclusive financial sector in Papua New Guinea.

The currency of Papua New Guinean, issued by the BPNG, is the kina, which was introduced on 19 April 1975 to replace the Australian dollar.

Trade and investment

In 2014, Papua New Guinea's merchandise exports were:

41% fuels and mining;
23.8% agriculture;
6.2% manufacturing; and
29% other.

Major destinations for merchandise exports include Australia (39.9%), the European Union (20.2%), Japan (11.7%), China (6.7%), and Singapore (5.6%).

In 2014, Papua New Guinea's merchandise imports were:

17.8% fuels and mining;
11.4% agriculture;
69.4% manufacturing; and
1.4% other. Budgetary support, which has been provided in decreasing amounts since independence, was phased out in 2000, with aid concentrated on project development.

Other major aid sources to Papua New Guinea are Japan, the European Union, the People's Republic of China, the Republic of China, the United Nations, the Asian Development Bank, the International Monetary Fund, and the World Bank. Volunteers from a number of countries, including the United States, and mission church workers also provide education, health, and development assistance throughout the country.

In July 2024 The International Monetary Fund would provide Papua New Guinea with immediate access to about $125 million in order "to support Papua New Guinea’s reform agenda, help protect the vulnerable and foster inclusive growth, with a focus maintained on strengthening debt sustainability, alleviating FX shortages, and enhancing governance and anti-corruption frameworks,"

Many countries and international organisations have supported climate change-related activities. Land registration efforts have had very limited success. alienated land is either held privately under state lease or is government land. Freehold title (also known as fee simple) can only be held by Papua New Guinean citizens.

Only some 3% of the land of Papua New Guinea is in private hands; this is privately held under a 99-year state lease, or it is held by the State. There is virtually no freehold title; the few existing freeholds are automatically converted to state leases when they are transferred between vendor and purchaser. Unalienated land is owned under customary title by traditional landowners. The precise nature of the seisin varies from one culture to another. Many writers portray land as the communal ownership of traditional clans; however, closer studies usually show that the smallest portions of land whose ownership cannot be further divided are held by the individual heads of extended families and their descendants or their descendants alone if they have recently died.

This is a matter of vital importance because a problem of economic development is identifying the membership of customary landowning groups and the owners. Disputes between mining and forestry companies and landowner groups often devolve on the issue of whether the companies entered into contractual relations for the use of land with the true owners. Customary property—usually land—cannot be devised by will. It can only be inherited according to the custom of the deceased's people. The Lands Act was amended in 2010 along with the Land Group Incorporation Act, intended to improve the management of state land, mechanisms for dispute resolution over land, and to enable customary landowners to be better able to access finance and possible partnerships over portions of their land if they seek to develop it for urban or rural economic activities. The Land Group Incorporation Act requires more specific identification of the customary landowners than hitherto and their more specific authorisation before any land arrangements are determined; (a major issue in recent years has been a land grab, using, or rather misusing, the Lease-Leaseback provision under the Land Act, notably using 'Special Agricultural and Business Leases' (SABLs) to acquire vast tracts of customary land, purportedly for agricultural projects, but in almost all cases as a back-door mechanism for securing tropical forest resources for logging—circumventing the more exacting requirements of the Forest Act, for securing Timber Permits (which must comply with sustainability requirements and be competitively secured, and with the customary landowners' approval). Following a national outcry, these SABLs have been subject to a Commission of Inquiry, established in mid-2011, for which the report is still awaited for initial presentation to the Prime Minister and Parliament.

Science and technology

Papua New Guinea's National Vision 2050 was adopted in 2009. This has led to the establishment of the Research, Science and Technology Council. At its gathering in November 2014, the Council re-emphasised the need to focus on sustainable development through science and technology.

Vision 2050s medium-term priorities are:)

In 2016, women accounted for 33.2% of researchers in Papua New Guinea. The European Union funded the Renewable Energy in Pacific Island Countries Developing Skills and Capacity programme (EPIC) over 2013 to 2017. The programme developed a master's programme in renewable energy management, accredited in 2016, at the University of Papua New Guinea There are 22 international ports, although not all are operational. The biggest is Lae Port, which handles about half of all international cargo.

The Institute of National Affairs, a PNG independent policy think tank, provides a report on the business and investment environment of Papua New Guinea every five years, based upon a survey of large and small, local and overseas companies, highlighting law and order problems and corruption, as the worst impediments, followed by the poor state of transport, power and communications infrastructure.

Main indicators

The following table shows the main economic indicators in 1980-2026. Inflation below 5% is in green.

{| class="wikitable" style="text-align: center;"

! rowspan="2" |Year

! colspan="3" |GDP

! rowspan="2" |GDP growth (real)

! rowspan="2" |Inflation

! rowspan="2" |Government debt (% of GDP)

!Total (bil. US$ PPP)

!Per capita (US$ PPP)

!Total (bil. US$ nominal)

|1980

|3.2

|1074

|4.1

|−2.3%

|12.1%

|n/a

|1985

|4.4

|1333

|3.3

|3.6%

|3.7%

|n/a

|1990

|5.5

|1471

|4.8

|−3.1%

|7.0%

|n/a

|1995

|9.4

|2082

|7.1

|−3.4%

|17.3%

|37%

|2000

|10.6

|2068

|5.2

|−2.5%

|15.6%

|42%

|2005

|13.6

|2347

|7.3

|4.3%

|1.8%

|32%

|2006

|14.3

|2423

|8.4

|2.5%

|2.4%

|26%

|2007

|15.9

|2622

|9.5

|7.8%

|0.9%

|22%

|2008

|16.1

|2604

|11.7

|−0.3%

|10.8%

|22%

|2009

|17.3

|2736

|11.6

|6.8%

|6.9%

|22%

|2010

|19.3

|2868

|14.3

|10.1%

|5.1%

|17%

|2011

|20.0

|2749

|18.0

|1.1%

|4.4%

|16%

|2012

|21.3

|2792

|21.3

|4.7%

|4.5%

|19%

|2013

|22.5

|2809

|21.3

|3.8%

|5.0%

|25%

|2014

|25.9

|3091

|23.2

|13.5%

|5.2%

|27%

|2015

|27.9

|3168

|21.7

|6.6%

|6.0%

|30%

|2016

|29.7

|3214

|20.8

|5.5%

|6.7%

|34%

|2017

|31.3

|3227

|22.7

|3.5%

|5.4%

|33%

|2018

|31.9

|3136

|24.1

|−0.3%

|4.4%

|37%

|2019

|33.9

|3173

|24.8

|4.5%

|3.9%

|38%

|2020

|33.3

|2966

|23.8

|−3.2%

|4.9%

|49%

|2021

|34.6

|2939

|26.1

|−0.5%

|4.5%

|53%

|2022

|39.2

|3260

|31.7

|5.7%

|5.3%

|48%

|2023

|42.2

|3437

|30.7

|3.8%

|2.3%

|54%

|2024

|44.9

|3584

|30.8

|3.9%

|0.6%

|53%

|2025

|48.8

|3813

|32.5

|5.6%

|4.4%

|52%

|2026

|52.1

|3986

|34.4

|3.8%

|5.0%

|49%

Statistics

Household income or consumption by percentage share:

lowest 10%:

4.3%

highest 10%:

36% (2008)

Labour force:

2.078 million

Electricity – production:

2,200 GWh (2008)

Electricity – production by source:

fossil fuel:

67.78%

hydro:

32.22%

nuclear:

other:

0% (2008)

Electricity – consumption:

2,000 GWh (2008)

Electricity exports:

10 kWh (2008)

Electricity – imports:

0 kWh (2008)

Agriculture – products:

coffee, cocoa, coconuts, palm kernels, tea, rubber, sweet potatoes, fruit, vegetables; poultry, pork, vanilla

Currency:

1 kina (K) = 100 toea

Exchange rates:

kina (K) per US$1 – 3.14 (April 2016), 2.7624 (November 1999), 2.520 (1999), 2.058 (1998), 1.434 (1997), 1.318 (1996), 1.276 (1995)

References

Sources

External links

PNG Survey of Recent (Economic) Developments: 2014–15, Australian National University / University of Papua New Guinea, September 2015
PNG Economics, a blog by former Australian and Papua New Guinean Treasury official, Paul Flanagan
The PNG Chamber of Commerce and Industry , a peak body for business representation in Papua New Guinea

Economy

Mineral resources

Oil and gas

Agriculture, timber, and fish

Agriculture

Timber

Energy

Electricity

Access to electricity

Entities and institutions

Electricity generation by source

Renewable energy

Hydroelectric projects

Transport

Trade and investment

Science and technology

Main indicators

Statistics

See also

References

Sources

External links